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Buying a Preferential Share in a Golf Club Ltd Company

  • 14-02-2008 8:45pm
    #1
    slumped
    Closed Accounts Posts: 1,946 ✭✭✭


    Hi All,

    I'm considering joining a golf club with preference shares available at 10k.

    There is a 5 year period where you cannot sell the share on to a third party which I am aware of and I'm aware of the fact that shares can go up and down.

    Is there anything I should look out for?

    I've read the prospectus and it all seems OK - I've also looked up the companies registraiton office for accounts and seems profitable.

    So what should I look for??

    S


Comments

  • #2
    slumped
    Closed Accounts Posts: 1,946 ✭✭✭slumped


    nobody??


  • #3
    portomar
    Closed Accounts Posts: 507 ✭✭✭portomar


    im afraid ive got very little advice, perhaps see if they own or lease the land? and planning restrictions. big cash made in recent year was selling to developers.


  • #4
    eggie
    Closed Accounts Posts: 880 ✭✭✭eggie


    You should check:

    -How much debt does the company currently have?
    -What is there annual cashflow / profitability the last 5 - 10 years?
    -How much are their debt repayments?
    - How much of these repayments will be paid before they pay preference share holders (i.e. will there be enough left after other debt payments to pay preference shareholders)
    -Are the preference shares cumulative (i.e. can they defer payments until a later date or are payable each and every year without fail), are they redeemable/callable at any time?
    -What is their estimated returns/ growth for the coming years.
    - Do they always meet their preference payments (has their cashflow been high enough to cover the required debt payments). Talk to other shareholders and ask their opinion/experience in dealing with the company involved. Talk to the board if possible.
    - Whats your return? Can you get a higher return for a similar risk elsewhere, or the same return with a lower risk.
    - What is their future expenditure plans? Will these improve/worsen their current situation? What are they planning on doing with the money you are investing, will their expected returns from using your invested cash exceed the repayments they will make to you?
    - Do they have the opportunity to borrow in the future if required? (how high is there debt to equity ratio and what rates can they borrow at?

    Just a few ideas to get you thinking, there are others of course.


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